Key success factors for Canada’s LNG export industry

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Jason Feer, Global Head of Business Intelligence , Poten & Partners
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Jason Feer, Global Head of Business Intelligence at Poten & Partners will be speaking at the upcoming Canada LNG Export Conference & Exhibition in May. In the build up to the event, we asked Jason for his views on the global LNG market and Canada's LNG plans.

Gastech News: How is the global LNG market changing? 

Jason Feer: The global LNG market is changing very rapidly due to the significant amount of uncommitted LNG that is entering the market. We believe that over the next few years, the percentage of LNG sold on the spot market and via short- and medium-term contracts will rise quite sharply. An analysis by Poten & Partners has found that the volumes of LNG sold under long-term contracts has diminished over the past three years and that average volume of LNG per contract, and the average duration of contracts, have both diminished. In short, the market is entering a period in which more volumes will be sold under spot and short-term pricing than in the past. This will require market participants to follow the markets more carefully and be in a position to react to changes quickly and with flexibility.

Gastech News: With numerous plans to export LNG, and good shipping routes to end-use markets, how can Canada establish its LNG export sector and move forward?

Jason Feer: Canadian LNG exports will have to provide competitively-priced supplies of LNG under terms that the market will accept. This may mean that pricing mechanisms and other terms may have to be more flexible than has been the case for LNG producers elsewhere. For example, hybrid pricing – or pricing that includes gas-hub pricing as well as oil-linked pricing – has become a more accepted way of pricing contract volumes. Buyers also have expressed a desire for greater flexibility in the terms governing their contracts, with some looking for larger delivery volumes in seasons of high-demand, and lower volumes during other periods. Being able to accommodate these requirements may benefit Canadian projects.

Gastech News: Will Canadian LNG be competitive in the current oil price environment?

Jason Feer: This really depends on the pricing mechanisms and levels at which Canadian producers sell their production. Canadian producers will be facing strong competition from US projects that are expected to benefit from low gas prices and flexible contract terms. They will have to make sure that the pricing structures and contract terms they adopt ensure their supplies remain competitive in the long run.

Gastech News: What are you most looking forward to at this year’s Canada LNG Export Conference?

Thursday 12th May: Jason Feer, Global Head of Business Intelligence at Poten & Partners, will be speaking about the "Global LNG Market Evolution". Join him and over 300 international industry stakeholders at the Canada LNG Export Conference and Exhibition, a platform for discussion, networking and business.

Do you agree with Jason? What are the key success factors for Canada's LNG exports? Leave your comment below.

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Photo Courtesy of  Poten & Partners.